Bangladesh’s Development Goals and Japanese FDI: Prospects and Challenges

Bangladesh has set a number of goals to become a developed country by 2041. The country has heavy reliance on foreign aid which is around 35 percent of the Annual Development Programme. However,, due to the Covid-19 and Ukraine-Russia war international aid basket is shrinking. On the other hand, owing to the recent international economic disorder the country is encountering several economic problems which include reduction of remittances and foreign currency reserve, serious trade imbalance, higher commodity price, devaluation of Taka against USD and inflation. In this background, Bangladesh's economic recovery and achievements of development goals need alternative financial sources such as FDI. Understandably, the 8th Five Year Plan of the country targets an increse of FDI from 1% of GDP to 3%. Although the government is trying to improve the FDI environment , the progress remains stagnant. Japanese FDI in the country is increasing in spite of having a number of difficulties. However, apparently no comprehensive study has yet been conducted to examine the growth of Japanese FDI in Bangladesh and its impacts on the economic growth of the country. This qualitative study, therefore, investigates probable contribution of Japanese FDI in Bangladesh and the prospects and challenges associated with it. Analysing a myriad of documents and 15 key informants' interview, this study suggests that Japanese FDI can contribute to materialize Bangladesh's development goals if the existing challenges are addressed. The initiatives can also pave the way for many different countries to invest in Bangladesh.